Audit 17/03/23

The audit is a new audit for the firm; the

firm may not have as good an

understanding of the client, is type of ​ ​ ​ (a)   so there is

likely to be an increased level of ​ ​ (b)  

• Inherent Risks
• Detection Risks
• Control Risks

Consideration should also be given to using ​ (a)  

audit team and the

testing that will be required on the ​ (b)  

balances.

• an experienced
• opening
• a junior
• closing

Dress You Like Co is a clothing

manufacturer whose​ (a)  

will be

subject to changing seasons and trends. It

is possible that some items may

be difficult to sell and may be overvalued if recorded at ​ (b)  

rather than at ​ (c)   as required by ​ (d)   .

• Inventory
• Cost
• LCNRV
• IAS 2
• IAS 18
• Total Assets

An ​ (a)   should be

obtained to identify items of slow moving or

​ (b)   .

• aged inventory report
• non-saleable inventory
• inventory days

Dress You Like Co has two sites where

inventory is held/despatched and errors

have previously occurred concerning the

transfer of inventory between sites. There is

the possibility that some items are​ (a)   counted

, and that

some are ​ (b)   at all leading to a risk

that inventory may be ​ (c)   .

• Counted Twice
• Not Counted
• Over or Understated
• Counted Once
• Over Stated
• Understated

Dress You Like Co is reliant on one supplier

for its purchases. Should it encounter a

problem or delay with its supply chain, it

may not be able to fulfil its orders

(especially to the supermarket chain). This

could lead to ​ (a)   from its

customers and ultimately ​ (b)   . This in turn could lead to ​ (c)   problems.

• dissatisfaction
• loss of customer
• going concern
• bad debt
• increasing expense

Dress You Like Co allows its supermarket

customer 60-day credit terms. This may

place additional strain on ​ (a)   and

lead to potential ​ (b)   problems

• Cash flow
• Going concern
• Working Capital
• Extra Expense

Request that ​ (a)   produce ​ (b)   for the year ahead to identify

any deficits in cash flow.

• management
• cash flow Forecast
• TCWG
• Auditor
• going concern review

The finance director is suing the company

for constructive dismissal but no mention of

this has been made in the year-end

financial statements.

The case has been going on for some time

which suggests that at least ​ (a)   of a

​ (b)   is required. and so there

is a risk that these steps may not be complete.

• disclosure
• contingent liabilities

There has not been a finance director in

place for the last six months of the year. The lack of finance

director increases ​ (a)   and

furthermore there is a lack of experience at

this ​ (b)   and the assistant is also

overloaded. The assistant may not have the

time or ability to answer queries from the

audit team which could lead to difficulty in

obtaining ​ (c)   required by the auditor.

• control risks
• high level
• sufficient information
• detection risks
• lower level